2007 (1) TMI 95 - HC - Income Tax

Before assessment could take place assessee sought to claim further deduction by filing a letter AO did assessment applying sec. 144B as difference between the income declared in original return and revised return was more than 1 lakh held that return originally filed could not be revised merely by filing a letter so AO was wrong in considering letter as revised return extended period of limitation u/s 153 not applicable for assessment

Summary

Issues:
1. Whether a letter claiming further relief could be considered a revised return for justifying the Income Tax Officer's proceeding under Section 144B?
2. Whether there is an invariable rule that a return filed under Section 139(4) could never be revised?
3. Whether the adoption of machinery procedure under Section 144B would render the proceedings void?
4. Whether the assessment was liable to be annulled altogether instead of being set aside?

Issue 1:
The primary issue was whether a letter claiming further relief could be deemed a revised return for the purpose of justifying the Income Tax Officer's proceeding under Section 144B. The Tribunal held that the Assessing Officer was bound to consider the letter as a revised return, and the order of assessment was within the limitation period under Section 153 of the Income-tax Act.

Issue 2:
Regarding the second issue, the Court considered whether there was an invariable rule that a return filed under Section 139(4) could never be revised. The Tribunal rejected the plea of the assessee, emphasizing that a mistake can be corrected in a return filed under Section 139(4) and that the mode of filing, whether original or revised, was not consequential.

Issue 3:
The third issue revolved around whether the adoption of the machinery procedure under Section 144B would render the proceedings void. The Court observed that the Assessing Officer's treatment of the return as revised based on a letter was contrary to the law, and the extended period of limitation under Section 153(iii) would not be available to the revenue.

Issue 4:
Lastly, the Court examined whether the assessment was liable to be annulled altogether instead of merely being set aside. The Court concluded that neither a return filed could be revised by a letter nor a return filed under Section 139(4) of the Act could be revised, ruling in favor of the assessee against the revenue.

In summary, the judgment addressed various legal questions concerning the treatment of returns, the validity of proceedings under Section 144B, and the applicability of the limitation period under the Income-tax Act. The Court emphasized that a letter claiming relief cannot be considered a revised return and that a return filed under Section 139(4) cannot be revised. The decision favored the assessee, highlighting the importance of adhering to legal provisions and procedures in income tax assessments.